Scrocca buys empty shell

Scrocca is a a modest market making firm in Amsterdam. It isn’t very large, but everyone seems to like them and they’re probably making money on a steady basis. One could say they are the biggest of the small market makers, or the tiniest of the big ones. They are currently ranked number five after Optiver, IMC, All Options and Tibra. In contrast to the Italian name, given by founder and owner Maurizio Scrocca, it’s an original all-Dutch company. They even decided to have an office in a distant boring suburb of Amsterdam.

It isn’t hot news anymore, but something weird has happened to those guys. They actually bought a listed company from Belgium. Maybe a civilized country, but not exactly the heart of the derivative trading world. Rumour has it they recruited the former All Options head of IT, and he may very well have infected this trading firm. Let’s have a closer look at their take-over target.

Option Trading Company
It’s called “Option Trading Company”. The derivative trading business isn’t renowned for its creative minds. OTC was founded by Pascal Vlaminck and Alexander Franco in 2000. After six years they decided to go for a listing on the Brussels exchange. As far as I can see they issued 2 million shares at around six euros. Twelve million looks a lot, but most of the shares are kept with the founders. The stock even climbed to 24,50 in 2007. With a possession of over 90% of the shares, the Flemish and the French can manipulate the share price as much as they want.

They couldn’t lock their shares in at 24,50. But no need to feel pity for both of them, as they paid themselves a steady dividend. Unclear what kind of bonus schedule they used. It clearly wasn’t sufficient, as their successful traders ran off beginning 2008. New hires didn’t succeed, losses accumulated and everyone was subsequently fired. The move to a new office was cancelled. Maurizio was happy to help. Have a look through their entertaining press releases when you’re bored. Or the Belgian press following this company (in Dutch).

The two board members were the last remaining traders. Not very successful, and after Scrocca bought the company they were told to go fishing. The question remains ; why does Scrocca buy a trading company without any employees and without any significant assets? The empty shell will have probably some tax assets, and of course access to that other major hub of Euronext : Portugal!

Here’s the last chart before the losses started to kick in.